>> a very good morning. welcome to "daybreak: australia." i'm haidi stroud-watts in sydney. sophie: i'm sophie kamaruddin in hong kong. we are counting counsel dob down to the asia market open. shery: i'm shery ahn. top stories this hour. investorrening of the over china priority and the fed's taper time line a global stock rout. the suspend pairing some of those losses. and bit buyers emerge. >> the market contagion testing

xi's resolve and how far he will go with his real estate crackdown. >> and the u.s. eases travel restrictions as covid 19 deaths surpass the toll of the 1918 influenza pandemic. this is a picture across wall street. we are sighing u.s. futures under a little bit of pressure but this after the suspend saw its worst day -- the 100-day moving average technical resistance level did hold which was really interesting. because we saw the last hour of trading see a little bit of a bounceback. still, j.p. morgan saying this is an opportunity to buy stocks barcia the global economic recovery will continue. also treasury writers rallied today. which was a little bit different from the tripped we saw in the past month where we continue to see falling stocks. and rising yields. so perhaps signaling that today's anxiety was a little bit deeper than usual. w.t.i. continues to lose ground after seeing the worst day in about a month. and we had the broad market selloff.

not to mention that the dollar also fell. the best day in about a month. given this haven demand. so take a look at the broader commodity space. g.l.c. is your function. and you can see basically a sea of red. especially being led by base metals. when it comes to iron ore in singapore, extending those declines under $100 a ton. china stepping up restrictions on industrial activity in some provinces. so we saw china really trying to tame prices. so they've been selling key base metals including copper from state inventories. and the fed will be watched not just for a tapering decision but also for how chair powell's views on price pressures, have evolved given these moves by commodity prices. but really haidi it has been about evergrande, right? why are we seeing all these markets so anxious today, especially commodity sector? because as -- evergrande could pose a real risk not only to say debt holders of chinese evergrande notes, domestically and in foreign markets but also

because it could affect the real economy of china. will that affect construction? the property sector, and how that is going to be felt across markets in the world given china's demand on commodities. that's really hit sentiment. haidi: yeah. and sherfy, what's really fascinating we've been tracking this evergrande story like some sort of slow motion car crash for months now. this is the story that's been building for years. but it feels like those pressures have come to the boil. and we're seeing the spillover when it comes to a wide range of assets not usually correlated to a chinese property market. take a look at the aussie dollar. we've lost about 3% so far this quarter. we're seeing that shorts build to a record now. it's a number of factors including looking like they will have to stay more accommodative. we've had lockdowns as you know, we've had this phenomenal slump in iron ore prices trading below $100 when it comes to singapore futures. and now this spillover, this is a litmus test. what will beijing do about evergrande and of course we know

that where china goes, centralliia, has huge vulnerabilities there. shery: and really interesting in this week of the fed policy decision, we continue to talk about evergrande, right? so we heard from the former new york fed president bill dudley say, you know what? the real estate sector, the market turmoil there, that may not change the cal laotian for fed policymakers. take a listen. >> they're not going to react to small market moves and then defer the tapering on that basis. they have to change their economic markets. i think at this point it's really premature to reach that conclusion. haidi: what could change is the path of covid. the virus, the vaccine rollout and these developments when it comes to the entry of foreigners in the u.s., the deposit in the u.s. will be essentially banning people that are unvaccinated to come in if you're a u.s. citizen you will be subject to extra tests. but opening up when it comes to fully vaccinated travelers coming to the u.s. sherfy, that good news when it comes to the data in terms of

antibodies in younger children, right? age 5 to 11. that will be headed to the f.d.a. for approval as well. haidi: let's turn to sophie for what to watch as we head to the market open across asia. sophie: well, evergrande concerns touching different corners of the market. at morgan stanley strategists noting there are enough catalysts that could trigar release for markets as they navigate a mid cycle transition. amid the fed taper and volatility in china. so staying long the dollar, being bearish emerging markets that is one play to ride out the wave. and a bet favored by citigroup. at socgen downside pressure on platen for the coming quarters as evergrande's perspective collapses may accelerate the downturn in china's economy. and over at wells fargo switching out the chart eric nelson cautioning that the offshore u.n. could weaken about 2% over the next month. to hit 60. the red on this chart here the combo of slower growth and more tolerance for further capital

outflows which nelson says will more heavily influence the currency versus equities. but as we have seen switching out the chart once more evergrande and wider regulatory concerns are weighing heavily on stocks in hong kong which saw a broad based selloff on the hang seng index as we saw tech, property and banking getting hit hard. pushing deep noor bare market territory and now near a support level that was established back in 2008 during the global financial crisis. at .., haidi, analysts don't expect a long lasting spillover from evergrande to banks and property. simple because regulators are not seeing allowing that to happen. but the overhang still lingering here for markets. and certainly in focus, haidi. haidi: what an overhang. that evergrande. and feeding into asian trade on tuesday. we have the global domino style selloff. let's bring in our markets reporter for more. so why now? because we've been tracking this story for so long. and i understand it's repayments due. there's bank loan repayments. due this week as well. but is this a case of the market looking for an excuse to sell

overstretched valuations? >> yes. i think to a degree, the week of september, used to be usually is a -- bear market for the risky assets. and you have this evergrande story coming to a head. and you have all these bad news coming together. but a case to be made that the market may have overreacted a little bit. as you mentioned that evergrande has been trading, the story is well-known among all these china watchers. the dollar bonds of evergrande have been trading below the dollar tore a -- for a dollar. so the market is concerned that it's going to be contagion for the whole sector in china for real estate. the property market slowdown is a deliberate policy choice. so in other words, this -- it's reversible if beijing wants to. and now contagion, and probably

getting to a point that have to step in. and the fallout for evergrande. haidi: how concerned should we be about the commodity slump as well? it comes on the top of the steel output curves that we saw in china. >> yes. the commodity is -- well, the china real estate market, also the decline of some commodities as a direct result of the chinese government. and the u.s. trying -- the maturity and the reduce of the pollution, the move to the clean energy, all these macro policies had an effect on the property market. so to a certain degree some decline of the commodity price is desirable because the chinese worried about the rising commodities squeeze the small and medium sized enterprises. haidi: all right. i want to bring in market reporter that joins us with some views -- when it comes to dip

buyers, are we starting to see them emerge? >> yeah. it really does seem like there's a little bit of -- i mean, you said it earlier in your question to ye this idea, you might need a reason to sell a little bit. a little bit of a reason to push out and reallocate in this kind of evergrande story is a -- the straw that broke the camel's back and you remember we do have a horde of other reasons that the market was basically coiled up like a spring and today seemed to be that breaking point. haidi: marcus reporter kriti gutpa and ye si in new york. will the policy response to the saga eventually become something more leak the lehman collapse? or the fed-led bailout and easing after the long-term capital management blow joy? bloomberg opinion columnist john alter says whatever the case that moment is here. john, great to have you with us. and you think it's going to be more like the ltcm implosion back in 1998. why? >> ultimately, it's because of

the response that the authorities made. i'm not saying that ltca is a positive -- a positive comparison to make at all unless you're comparing it to lehman which obviously led to the biggest crisis in living memory. but in the case of ltcm you had this very heavily committed hedge fund that has enough people to link to it that it needed to be rescued in a hurry. and you saw the response was that the federal reserve back then under alan greenspan did not -- knock heads together among -- to make sure that it got through. and then cut rates thereafter. and i think that is a more likely scenario. that it messes up the markets for a while. but that the chinese authorities are not prepared to let it go. let evergrande go in the way that lehman went there. more determined to make sure that the markets continue to

operate. and take the risk that that will boost moral hazard as a result. shery: a lot of debate when it comes to china watchers, people that are starting to look at this now from a western perspective, say that if you're comparing this to lehman you're fundamentally misunderstanding the role of the party and what they're trying to do in china and how this system works, right? are we looking at potentially a long-term drag on growth as opposed to a short-term -- short-term spectacular implosion? >> yes. that would be my -- that would be my response. i think -- i think everybody knows that china is run differently than the u.s. was 13 years ago when lehman happened, people might not have quite grasped that in the west 13 years ago. i think there is absolutely an understanding now that in a very meaningful way, china is run by the communist party and is -- if

it's capitalist it's capitalist in a different way from the u.s. and western europe. that said, if you got far more debt than people can repay, you have the risk of a debt crisis. and you still need to take action as a government to deal with it, whatever your underlying ideology is. china is in a better position because of the degree of state influence over the economy to do something about this. but it's still going to create a drag on the economy. shery: that's self-reinforcing, the dynamic of risk that's playing out at the moment. and of course continuing to watch this story and always great to have you. john authers with his take. over to von von in new york and has our first headline. von i: good morning. the united states will soon open air travel to most foreigners as

long as they're fully vaccinated against covid. the new rules will replace the current system which currently bans non-americans arriving from places including the u.k., europe, china, and india. unvaccinated american travelers will also need to test within one day of departure. the policies are expected to start in early november. fiers and partner biontech say their veen is safe for children. the findings from a trial of 5-11. they could pave the way to begin vaccinating grade schoolers in months. and pressure to immunize kids has been climbing in the u.s. with a new school year coinciding with a surge in delta-linked covid cases. india will resume exporting covid veerches next month. the shots will be provided to the world health -- shipments in april after the delta various variant swept through the major cities. it hurts the push to quicklily

vaccinate developing chaitins -- nations around the world. india expects to have 300 million doseness hand in october alone. canada's prime minister justin trudeau appears set to retain power after a close election. how far, he may fall short of regaining a parliamentary majority. protections compiled by the national broadcasters show the liberal party winning 155 of the 338 house of commons seats. that compares with 119 for the opposition conservatives under aaron o'toole. official results are due later. global news 24 hours a day on air and on bloomberg qitake powered by 2,700 journalists and analysts in more than 120 countries. i'm von von. vonnie quinn. shery: how long the iron ore price slump may continue. how low it can go amid all the china angst. and capital andy kapyrin says a pull jag could be worth buying.

he says his market outlook is just ahead. this is just ahead. this is bloomberg. ♪

>> questions are always about pricing and time. so from a price standpoint i think it's 10% to 20%. wit time -- but time you have to get through the third quarter earnings season and let's see how the revision plays through that. let's see how the market digests the fed moving toward tapering by year end. so to me it's two to three months. i think you got to be patient in here. and let's see how this goes into basically the fourth. shery: michael wilson's warning a plunge of 20% in u.s. stocks is looking like a real possibility. given today's rout. our next guest says the pullback may be worth buying as dips tend to be short-lived. without a recession. for more we're joined by regentatlantic and co-head of investments andy kapyrin. and andy, always great having

you hoo -- having you with us. you look at this chart on the bloomberg you can see how bears have really dominated the market recently. but we do have a handful of risks this week. so what's giving you certainty that we could still go higher from here? andy: we haven't had a much of a dip in stocks yet. but i think any dip that gets much larger than what we've had already is likely a buying opportunity. you're right. this is a revvingy week. it got off on a bad foot with evergrande's likely to fall. but more importantly, we're looking at a lot of central bank activity. we could disappoint the market, especially given the backdrop of weakening economic activity, a slowing economy, a fed announcing a taper prematurely could really hit stocks. outside of that, look past that. and morgan stanley's comments that they started the program with, really reinforced the point. yes, we have kovacs. yes, there's going to be a

deficit of good likely news until earnings season reignites midway into next month. but without a recession, bear markets seldom happen. 20% drop is incredibly unlikely. which means that buying high quality assets at a discount after any pullback in the market is going to be a good thing to do. shery: an interesting day today given we are so much focused on evergrande and we do have the fomc coming up, right? you are saying in your notes that both the transient inflation camp and the 1970's inflation camp both are wrong. what are you expecting to hear from the fed and what will you be buying in the meantime if you think that both camps are wrong? >> so i think both camps are wrong because they're too highly polarized. you don't have to have 1970 style inflation to say that transient inflation is a call that is a little bit too dovish. what we experience in the u.s. already, stretches the definition of transient. what we're -- what we're experiencing is not just

reopening activities becoming more expense he have but starting to see wages especially feeding through into service prices, especially into food away from home. we're starting to see rents increase. pressures across a number of different cost categories. and supply chain pressures getting into many manufactured goods. so that is not what transitory looks like. it likely means for the next two to three years we will experience inflation that will make us uncomfortable. something in the neighborhood of 4% to 5%. but a return to 10% plus of the 1970's, that's basically off the table. because the economy is structured so differently today versus the way that it was in 1970. what do you do with this information? how do you approach out of constructing a portfolio? what you do with this information is you recognize that the most dangerous place to be in an inflationary environment is long-term bonds. long-term bonds, yielding well less than the rate of inflation are not likely to be a winning investment. they do provide a hedge of protection on a day like today.

but outside of that benefit, investors are likely to see capital losses on that long-term bond holdings. haidi: and which in particular, what are you looking at at the moment as opportunistic? andy: sure. so when i look at cyclicals, i'm really focusing on the u.s. economy. when i say buy the dip, the dip in the u.s. economy has been relatively shallow so far. the dip in u.s. stock markets very shallow. but on a relative basis, small cap stocks and value and cyclicals hit a relative peak in march and have actually lost ground relative to growth plays and work from home investments. this is largely driven by the delta variant. as we conquer this delta variant in the u.s., as we get better at learning to live with this virus, and learning to approach a new normal, we're looking to see a re-emergence of cyclical plays. that will include financials and it will include materials and energy stocks in particular as

well. haidi: when it comes to real estate, you're also quite keen on reetz -- receipts -- reits and what segment will you be most compelled to go into at the moment? andy: reits are viewed as an inflation hedge because they own a real asset and if you're investing in industrial reits you have p.p.i. or c.p.i. escalators in there, in their leases f you're investing in apartments, well, most apartment leases are 12 months which means every year, they reset to the current fair market rate. whatever the market will bear at that point in time. there is a lot of scope for them to be able to increase rents over the next 12 to 24 months. and as everything to do with increasing wages. which feeds through into affordability of housing. which feed through in the demand for housing. and even with a very strong

return so far this year, reits are experiencing a recovery. some of the most attractive parts of the reit market are apartment owners like avalon bay and equity residential. shery: regentatlantic and co-head of investments. andy kapyrin. you can get a round-up of the market action and the stories you need to know in your day. this edition of "daybreak," bloomberg subscribers can go to their terminals and the domino effect. it is a sea of red out there. we have plenty more ahead counting down to the start of trading this morning in asia. this is bloomberg. ♪

shery: a quick check of the headlines. a u.s. unit of mitsubishi u.f.g. has received a cease and desist order from u.s. regulators signing unsound practices in technology and risk management. the office of the controller of the currency flagged non-compliance with security standards. the order requires a union bank to improve risk governance and aassessment internal controls and staffing deficiencies. u.s. auto regulators will examine the safety of millions more airbags that escaped recall and were installed into vehicles. the move could lead to an expansion of the callbacks. the agency says he has not found a safety risk but additional evaluation is needed as the new phase in the years long effort to replace defective airbag inflators that can explode in a

crash and spray metal shards. two years after its i.p.o. crash wework will begin trading on the nyse around october 21. shareholders are set to acquire weworks will meet on october 19 to vote on the plan and shares would be listed under the ticker w.e. the acquisition just under the initial listing price. taking a look at the day ahead for australia and new zealand, we're starting off in new zealand where consumer confidence fell in the third quarter in the wake of the latest lockdown. in australia we have the aussie september policy meeting in minutes and those comments due out about half past 11:00 sydney time this morning. we will be watching iron ore miners at the open and shares have fallen sharply on the back of chiba -- china's steel production curbs and further languishing for iron ore prices given the expected impact of the property clampdown and the evergrande story in china as well. we have lots more ahead on

"daybreak: australia" as markets tip to try and weigh the risk of a debt crisis in china. lots more to come. this is bloomberg. ♪ (announcer) back pain hurts. you can spend thousands and still not get relief. now there's aerotrainer by golo. you can stretch and strengthen your core, relieve back pain, and tone your entire body. (man) and you're stretching your lower back on there. there is no better feeling. (announcer) do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me. it works, 100%. (announcer) find out more at aerotrainer.com. that's aerotrainer.com.

shery: you're watching "daybreak: australia." the headlines, u.s. house democrats have unveiled legislation to fund the government until year end. and suspend the debt limit through december 2022. it's part of a must pass spending bill needed to keep the government open past the end of this month. the revvingy move aims to pressure republicans who pledged to vote against an increase in borrowing limits. the biden administration says russian restrictions on natural gas exports mean some european countries may not have enough to heat homes this winter. and gas prices surged monday on

news that moscow-based gazprom offered not to pump more gas to the continent in october. meanwhile, the u.k. government is warning of a long, difficult winter with high energy prices, tipping power suppliers into bankruptcy. china has appealed the world trade organization ruling that rejected its claims against the u.s. over solar powered tariffs from the trump era. the w.t.o. panel says china failed to establish that washington's import caps were inconsistent with the w.t.o.'s rules on the measures. china's move will effectively act as a veto of that ruling. with no w.t.o. body able to immediately hear the appeal. former u.s. treasury secretary steve minchin a multibillion dollar private equity fund. bloomberg forces say minchin has raised about $2.5 billion for liberty strategic capital. most of the money is from middle east sovereign wealth funds including saudi arabia's public investment fund. and it was launched with the focus on technology, financial

services and fintech. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2,700 journalives and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: the u.s. will reopen its boredders to most foreign travelers as long as they are fully vaccinated. the news comes as the number of americans who have died of covid-19 have now surpassed the number killed in the 1918 influenza pandemic. joining us now for the latest is bloomberg san francisco bureau chief. this seems to be the biggest and most fundamental change when it comes to travel rules here in the u.s. what do we know? >> so a lot of rules will be relaxed. the u.s. currently has bans on travelers for many areas including much of europe and the u.k. so this rule will enable people who prove they are fully vaccinated to come into the country and for americans who want to return for foreign travel and prove that they have had a test.

and unvaccinated people will not be allowed in. a widened gap between the vaccinated and unvaccinated once again. we'll see. but this is -- it's good for travel and good for people who have been traveling and haven't been able to see their families and shares of british airlines, the parent of british airlines jump almost 12% today on this news. so it's -- the biden administration trying to sort of restart travel. while doing so safely. haidi: the fiers clinical trial from children on ages 5-11. what do we know about efficacy and about safety and how close are we to approval? >> fiers and biotech saying that their vaccine an fetch production of antibodies in kids from 5-12 and this was in a dose of about a third the size of the approved dose. so they still have to do some more tests but on a broader group of people who are enrolled, kids who are enrolled in the trial. that they expect to file an

emergency use within weeks and anthony fauci, top medical advisor saying he would expect kids to start being vaccinated before halloween which is the end of october. so that's offering some -- for parents and people who are hoping to get kids immunized and in school and parents need to get back to offices and worry about -- and kids represent 30% of new cases in the u.s. so important that it come to pass. shery: u.s. covid deaths topping the 1918 flu. we saw that vaccinations will be the game changer. what's happening? >> right. so we passed about 675,000 deaths which is about equivalent to the 1918 flu. there are many differences between what happened between now and 1918. and most notably the population is much larger now than it was in 1918 so a lower death rate now. but experts say it's a real disappointment at a time where we have modern medicine, we have veerches that can help stop thip stop this and seven million americans who have chosen not to

get the vaccine and as we know the virus is far from over. we are still entering the winter. and we will unfortunately have many more deaths to come. so a sad milestone in the fact that we will have a worst -- than 1918. haidi: bloomberg san francisco bureau chief with the latest on the virus. well, as we've been talking about the u.s. will soon reopen its borders to most vaccinated foreign travelers. putting an end to a ban that's been in place since march of 2020. air france, k.l.m., ben smith told bloomberg that he's so pleased with the changes. >> 40% of our capacity and our revenues are -- in 2019 were destined to and from the u.s. so it's fantastic news for our group. k.l.m., and based on what we saw in summer, the european -- the european borders are open, we expect a return of traffic numbers from 2019 to move

foreigners closer to those dates very quickly. so we're really, really happy about this. and we've been waiting a long time for a year and a half. >> how are you going to configure the aircraft? are you going to be seeing this as an economy heavy to start with? i.e., that's the back of the plane you're going to be focusing on, do you think this kick starts business travel, what kind of mix do you anticipate seeing? >> i think it's both. i think what we've seen so far in areas where restrictions have been lifted, is there's pent-up demand both on the leisure side and the corporate side. and many businesses have not seen their -- their colleagues have not seen their customers for a year and a half. so definitely in the short run, we expect there to be -- will that continue, still to be seen. but for families, and who haven't seen each other in a year and a half great news and we expect that to return quickly. and as i said, pent-up demand for business and we'll see if that holds after the initial

demand gets realized. >> do you think there's going to be a price war on the north atlantic as a result of this? there's a lot of capacity that could potentially come back on. >> look, there will be some pricing pressure. and what we experienced this summer in europe was -- much worse pricing than that. so we just got this news now. we're studying it. we're seeing how we can have -- add capacity back and we will be studying what our competitors very quickly and we'll be loading new flights into the system probably as early as tomorrow. shery: so early tomorrow. that's pretty soon. and i'm wondering when the travel catalyst will be? because if we put aside business travel for a second, i don't know what that's going to look like. summer season is over. no one travels that much in the fall because of kids. are we looking at the christmas season and that being that big boost and are you putting capacity in tomorrow that implies more like a business

travel kind of boost? >> well, since the beginning of this crisis, our booking curves have really changed. many of our customers both leisure and business have been booking much closer into their departure dates because of all the unknowns. what i mean, we're going to load flights and capacity tomorrow. that doesn't mean flights for tomorrow. it means over the next 356 days, we may adjust that capacity of getting it closer. but we will add capacity for sale starting tomorrow. so you'll see -- you'll see changes on a big network, some big volume routes, affected tomorrow. shery: air france k.l.m. ben smith speaking with bloomberg guy johnson and alik steel. how low can iron coree go? we will be talking to a.n.z.'s daniel hynes about the outlook for the metal. and other key commodities. this is bloomberg. ♪

>> there's been a lot of discussion about china is even investable. i'm in the camp that believes that it is, the laws of their contract laws are not there, private property rights are not there. so it's only gotten worse over the past year as we've seen.

evergrande is just the latest negative for investing in china. shery: research president ed yardeni speaking about the real estate crackdown calling the sector uninvestable and the concern about the crackdown in real estate not to mention evergrande worries really extending to the commodity space. what happens if the real economy in china starts to slow down and their demand for commodities falls? and the fact they are trying to achieve those environmental goals and you have iron ore slightly rebounding but still below that $100 a ton level after a surge into that $230 record high back in may. i mentioned the environmental goals. they're also trying -- air quality for the winter olympics next year. china trying to tame prices, has been selling base metals including copper and copper under a little bit of pressure right there as you can see. and they're selling from their state inventories. crude has also seen pressure given the raw selloff that we've

seen today. we continue to see the leg lower. the worst declines in about a month. but this after rounding about 40% this year. given all of those disruptions in supply including the hurricane issues, not to mention that energy crunch in europe as well. uranium has become a hot commodity this year. right now, we saw that downside pressure below that 50 level. but there's been a lot of optimism, the nuclear power, haidi corks play a bigger role in that push toward clean energy around the world. haidi: sherfy, you mentioned at the top this big iron ore prices having tumbled 60% since the record back in may. chinese demand continues to wane and we have the fears of the cascading impact of the crisis at evergrande and potentially beyond in the property and construction sectors. all of this adding to the -- and get some analysis with senior commodity strategist daniel hynes. dan, let me throw out --

becoming evergrande chart when it comes to how low can you go impact of eastern ore prices at the moment. this is --iron ore prices, now 60% from that may peak. when you take a look at the correlation between evergrande bond prices and the iron ore price it's almost kind of, you know, in step with each other. right? so where do we find a bottom in this market? daniel: yeah. that's not surprising. we're seeing that correlation. and the evergrande crisis is at the core of this selloff. not just the iron ore and steel markets. but the broader commodity complex. i mean, the housing market has always been a pretty important part of any major economy. and certainly for china, its relationship with the steel and iron ore market is obviously very, very strong. so that -- that confidence in --

that property market continuing to grow is clearly -- has clearly been breached. and after hitting those record highs, that sentiment has turned very quickly. and then look, it's a market which in a sense has very, very low support levels. i mean, the cost of production of iron ore itself, you know, isn't -- is in the $20 a ton mark. so that doesn't y'all kick in anytime soon. so it's going to be about confidence in manufacturing and construction activity in china which will eventually stabilize prices. now, we are entering that normal seasonal pickup and we see steel production generally start to recover into the year end. but this is coming against those environmental-driven policies where authorities are trying to constrain output of the steel industry at the same time. so it's really -- and where

things are going tastablize, but i do get a feeling that we're probably not too far from the bottom and we could potentially see a little bit of a bounce into year end. but it's going to be still a pretty wild ride. haidi: we have chinese steel production in august falling to the lowest since 2008. the stockpiles keep building. you got to be long-term bearish, right, when you take a look at the environmental and policy direction that china is going in. regardless of what happens to the property sector. daniel: yeah. and absolutely. the steel industry itself is relatively mature market now. certainly the economy as well is still transitioning away from that more investment-led model to the services-based one. so that will cease peak steel demand in the not too distant future. and ultimately start to weigh on

iron or demands. longer term, i think we're in a -- probably a structural decline. and unless we see really tightening of global supplies. and that is happening in other commodity markets. but i do -- i do feel like this is probably the last hurrah in terms of that fundamental growth in steel demand. and that will obviously weigh on the rebound, the extent of the rebound that we could see in iron ore. shery: dan, we knew about the tightening in the china property sector and how much of that has already been priced into some of these metal prices? and how much more, what's changed with the evergrande saga? daniel: well, not too convinced that it was completely priced in. i think there was certainly expectations that -- while constraints are being placed on the property market in some of the tier one cities, there was still very strong growth in t-2 and t-3 and the more broader

sort of sectors. and that has been intimated by authorities in china and continued support and development of the rule sector. this debt crisis does shape those -- that confidence, that this will be -- that weakness in t-1 will be offset by other markets. and so it is -- the market and the traders are trying to assess where things will eventually land. i mean, i do still have some hope that things will stabilize and the crisis itself is more shaped to confidence. but clearly at the moment, there's a lot going on. shery: when do you expect the energy crunch in europe to stabilize? what's going on over there and what's happening to coal prices across asia as well? daniel: yeah. well, i mean, i can't see that

until we see inventories of certainly gas -- some of the other vossal fuels normalize. i mean, utilities have been really keen to see cargoes of -- demand of l.n.g. in particular, to i suppose filling that gap we're seeing from renewable energies which hasn't clearly produced as much as hoped this season. and obviously coming into winter, and a close eye on some winter forecasts and how that will fanuc toward the heating season. but for me, it's still around that duplication between the electricity markets and the fossil fuel markets. and i can't see that abating anytime soon. i expect to see coal and l.n.g. prices remain relatively high for the foreseeable future. shery: daniel hynes, always great having your insights. a.n.z. senior commodity strategist with all the different commodities that we're

watching. and we were also watching president biden speaking with the u.n. secretary general antonio gutierrez in new york as this u.n. general assembly kicks off this week. president biden saying that the climate crisis must be met with global solutions and that he believes in the united nations and its values. secretary gutierrez saying that he's shown strong commitment on climate change and human rights. coming up, investor advocates tell the s.e.c. to amp up its crypto scrutiny. and many players are flouting the rules. details next. this is bloomberg. ♪ bloomberg. ♪

sophie: time for morning calls ahead of the asia trading day. markets assessing fallout from evergrande with regulators being looked to for more clarity and over at barclays they do anticipate a significant drag on property if a default happens. but they see the situation as far from being china's lehman moment. and capital economics, they expect authorities will ensure that households exposed to

evergrande and other struggling developers will be made hole to limit the wider economic damage. but this is not to downplay the potential risk given the property sector is at the tail end of a 25-year boom. which has seen construction outweighing other sectors when it comes to contribution to china's g.d.p. so flipping the board capital economics does remain downbeat on chinese equity markets, prospects in light of the structural head winds that face the country even if the economy avoids a sharp increase in prices. shery: let's take a look at some crypto asset. because with the broad selloff that we saw in the markets we continue to see the pullback in bit coin. it was rebounding slightly in the asia session but paring back those gains. it's now trading about 43,000 level. it could test 100-day moving average which receipt now sits at around that 40,655 level and el salvador's president coming out and saying the country has actually bought the dip again. we had a loss of crypto-related including robin hood testing a

crypto wallet and really interesting that we continue to see this selloff as a broader market -- the broader markets are on that risk off attitude as well. because we continue to see this trade of bitcoin as a risky asset. we saw the bitcoin could be a portfolio diverse fire and the correlation between bitcoin and 100 has been positive since february 2020. and let's discuss all of these wild moves with bitcoin and other crypto-related assets and bring in bloomberg's su keenan who is watching all of the market action. so as i was saying, really not trading as a portfolio diverse fire -- diversifier or safe haven. >> we saw investors dump crypto with their high beta ticktocks and many say it did behave more like a tech stock, not really a diverse supplier. but let's revisit the price charts. because as sherfy said, just two

hours ago if you looked at that chart you would have seen 8%, 9% declines across the board. so we are seeing a lot of those losses pared but still crypto took a very big beating. bitcoin in particular, the most widely traded cryptocurrency. it was down as much as 10.7% earlier. ether briefly was down -- below 3,000 and the popular difi dogecoin took the biggest hits. bitcoin which has rebounded from its july blow, analysts, you can really see the selloff before the rebound we're looking at now. but bigger picture, year to date, when it comes to bitcoin you can see it was already coming back from that big july low. and analysts are now predicting due to this latest bout of volatility a choppy week ahead with a potential pullback to 41,000. the chart watchers say bitcoin

could test its 100-day moving average but support at 40,000. and some attribute this equitiness of the drop in crypto prices to the fact that we had more than 272,000 traders have their accounts liquidated just in the last 24 hours. that's equal to about $1.billion worth of crypto. that's according to one of the crypto trading stats and el salvador's president not everyone sold. but it's interesting to note a group of investor advocates wrote a letter to the s.e.c. urging it to amp up its crackdown. vigorously apply existing rules to tokens. haidi? haidi: we -- yes. we also saw coinbase bowing to pressure from the s.e.c. and halting a launch of a crypto lending. disblinchts this is aboutface and halting this program which could have geffen yield to many that were holding crypto. much like a bank might pay interest on its accounts.

the s.e.c. has made it clear that they plan to sue coinbase if they went, followed with this plan, and so quietly coinboys put a blog post on an earlier posting announcing they were not going to go ahead with this. all of it coming as the s.e.c.'s chair gary gensler takes a tougher line on crypto products at that could fall under their purview such as paying yield on similar platforms. and the stock managed to cut its intraday loss billion in half by the close. it did launch in an i.p.o. in july. let's talk about robin hood. shery addressed the fact that there would be a wall the product trading. we did see robinhood rise 2% after hours before giving that back. haidi: in the next hour captrust, don't give up on cyclicals and value. he will be sharing his market outlook amid the turmoil.

from evergrande. and moneyline founder and c.e.o., to discuss this week's i.p.o. through the fusion acquisition spac and rollout into crypto trading. that's it for "daybreak: australia." "daybreak: asia" is next. this is bloomberg. bloomberg.

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haidi: oh, and welcome to "bloomberg daybreak: asia." sydney: i am sydney. shery: and from bloomberg headquarters in new york, i am shery ahn. global stock selloff as concerns mount about china property risks and fed tapering. market contagion now testing president